For
technical information about the mine we rely on public data sources such as
mining engineering journals and other industry publications, mine descriptions
and equipment lists when available, plus government publications such as the
NSW Coal Industry Profile, the Queensland Government business portal, the Indonesian
Coal Book, the TEX Report, the US Energy Information
Administration and other sources. Mine production data is collected from
quarterly and annualreports from coal
mine operators where available, plus supplementary production data from
national industry bodies.

The data
quality varies according to country. In order of reliability and completeness
are mines in Australia, Canada, South Africa,Colombia, the USA, Indonesia, Mongolia and Russia. At present much US
production data is unobtainable because so many producers have stopped
reporting while they are in Chapter 11 administration. For these producers we
must use EIA mine production reporting which is about a year out of date.As the US industry is re-organised we expect
the data flow to improve.

Why don’t you have Chinese mines?

China does
not normally produce seaborne traded coal exports which is our costing focus.
In practice Chinese individual mine production data is unobtainable there are
close to 11,000 mines of which most are effectively artisanal producers. Major
companies produce about 10 percent of Chinese coal. These company is do not as
a rule report individual mine production numbers. While It is possible to rank
the major coal producer companies on cost this covers only a representative
sample of Chinese production and is clearly not on a mine-by-mine basis as we
are able to do for other countries.

How reliable are the cost estimates?

Metalytics
coal cost curves are derived from engineering-based coal cost models for each
mine. The models cover the full range of surface mining methods - draglines,
rope/hydraulic shovels, excavators and truck fleets, drilling and blasting,
loading and hauling. For underground mining the models cover longwall,
continuous mining and bord and pillar mining, plus of
course coal preparation and washing as required. Offsite rail costs are estimated
from gross and net tonne-kilometre costs specific to each rail network used for
coal haulage in each producer country. Port costs are derived from reported
port charges where available, and ocean freights are calculated for capesize, panamax and handymax vessels using current bunker and diesel prices,
time charter costs and toll charges. Royalties are calculated according to
statutory formulas. For mines producing more than one saleable product, cash
costs are value-weighted according to saleable product prices.

For
the purposes of ranking and cost comparison the CFR cost curves are drawn on the
assumption that all exports got to the port specified in that particular cost
curve.

Each mine model draws cost estimation data from look-up tables for each
country, where table costings are estimated from survey data and the Cost
Estimation Handbook published by the Australasian Institute of Mining and
Metallurgy. Look up table cost estimates for the various mining methods and
processing routes are driven by labour, fuel and power costs indices and by up
to eight separate equipment operating cost indices.

The Metalytics coal mine cost modelling was initially created by Marc Gersteling, an accomplished mining engineering professional
and coal industry specialist, with over 15 years’ experience in the mining
industry. He has worked throughout Australia’s major coal basins for producers
including the BHP Billiton Mitsubishi Alliance, Rio Tinto Coal Australia and
Xstrata Coal in site-based detailed mine planning and design roles. This
included working at various times as a Truck and Shovel Mine Planning Engineer,
Drill and Blast Engineer, Coal and Partings Scheduling Engineer and Mid-Term
Mine Planning Engineer.

Naturally
we reconcile our modelled costs with reported costs and operating cash flow
measures such as EBITDA from coal producers so far as are available.

Are all the cost curves in US dollars?
Yes! All cost curves and data use US dollar prices and costs. Mine costs for
non-US operations have all their prices and costs converted to US dollar
equivalents at the exchange rates shown in the Readme section of the cost curve
files.

What years do the cost curves cover?
We have modelled all years since 2010 out to 2020. The downloadable cost curves
on the website contain three year estimates for last year, this year and next
year.

How often are the cost curves updated?
All of our models and cost curves are constantly under review. As new
production and other data come in, the cost curves are re-estimated and posted
back onto the site.Normally the models
are re-estimated four times a year following publication of quarterly reports
by the major producers.

Copyright and Fair Usage
Metalytics retains intellectual property rights to all Metalytics cost curves
and other software products downloadable from the coalcostcurves.com.au
website. Fair usage rights pass to the purchasers of Metalytics products. These
rights entitle users to retain Metalytics products for their own exclusive use
for any purpose within their own organisations except for re-sale. Cost curves
and data may be freely published by users in their own documents and reports.
All we require is the usual acknowledgement of the source of the information
used.